Ownership structure and risk disclosure: a study of Malaysian listed companies

Abstract

This research focuses on the importance of ownership structure as a determinant of risk disclosure. It is expected to contribute to the literature particularly in the Malaysian context, where risk disclosure practice is in the infancy stage. This study uses multiple regressions in assessing the variability of the extent of risk disclosure. The overall results confirm that highly concentrated ownership would lead to high agency problem, which then leads to less disclosure. This implies that, to promote greater transparency in countries where many of the large listed companies are family-owned, more stringent laws that mandates adequate risk disclosure is clearly warranted. This would ensure that the needs of all stakeholders are properly met.

Corporate Governance and Risk Disclosure: Indonesian Evidence

“…The results also reveal a non-significant relation between a firm's leverage and risk disclosure 8 .…”

“…Characteristics of foreign ownership in listed company in Indonesia majority are also included as dominant shareholder (that is, above 5% ownership). This dominant ownership may lead foreign ownership to act in a way that resembles ownership concentration, which ultimately reduces the incentive to disclose more information 8 .…”

“…This problem arises because shareholders, as residual claimants of a company's business activities, will make an effort to secure their interests by influencing management to act in their favor 7 . Concentrated ownership, with the presence of dominant shareholders, will create a disincentive for a company to publicly disclose information because of the low interest of other stakeholders in the company 1,8 . Based on this argument, the first hypothesis of the study is:…”